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By Deal Pack - July 9, 2013
In a utopian society, customers would make their payments on time. Unfortunately, some customers are not perfect and fail to make their payments. If this happens, usually there is a point where repossession is sure to follow. If the time comes to repossess a vehicle, certain protocols must be followed to avoid negative repercussions. It is never ideal when the customer gets to keep the car because the dealer was too forceful in trying to recover the vehicle.
When a customer is delinquent in making payments, the first priority is to get the customer to make those payments. This not only lowers the costs of having to secure the vehicle but also reduces the chance for lawsuit in the case of repossession gone awry. A couple of factors can maximize a company’s collection effort. One way is to give the customer multiple notices that a payment is due. These notices can include a physical letter, text and/or phone call. It is the customer’s responsibility to make payments. If they fail to do so, it is the company’s responsibility to make the customer aware that if a payment is not made, further action will be taken. These notices will give customers no valid excuse for not making their payments.
Another way to maximize payment is to install a starter interrupt device. This device will cut off the car if the customer is too late in making their payment. If they make a payment one can turn back on the device and the customer will be able to drive the car. If this device is installed it is imperative that you explain it to the customer before they make the deal. This will cause the customer to be more careful in making payments while not violating their trust in the process.
Even when the collections efforts are maximized, there will still be customers that will not make their payments. As one final effort to receive payment, a right to cure letter must be sent to the customer. The law is different per state but a right to cure usually explains to the customer the following: their delinquency, their right to fix the problem within a certain time period, the dollar amount needed to cure the problem, and the company’s right to repossess the vehicle if the problem is not cured. If the customer fails to make payments, the next step is to secure the vehicle.
There are always going to be those customers that are reluctant to turn over the keys to their vehicle. In that case, it would be smart to have the legal right to repossess the vehicle, otherwise known as a writ of replevin. This will allow the company to repossess their vehicle with the law behind them and without being forceful or unpleasant. If a customer cannot be found, one may try to gather information from people that know the customer. If this is the case, the company cannot disclose why they are looking for the customer. It is best just to confirm the information already received from the customer and continue searching. If you decide to outsource the repossession, keep in mind, the company is fully responsible for the actions of the third party.
Repossessing a vehicle is never a desired action in the automobile industry. However, it is a foreseeable event and can turn into a possible liability. In order to keep this possibility at a minimum it is best to give the customer plenty of notice and a right to cure. If the customer doesn’t hand over the keys willingly, get the law on your side so the law is not on theirs.
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Advanced Business Computers of America (ABCoA) develops and supports end-to-end software solutions for the subprime finance industry. Since 1983,
we have helped automotive dealerships and finance companies eliminate duplication, remain compliant, and achieve success with dependable, all-in-one software and white glove service and support.
Deal Pack is a complete, all-in-one software ecosystem customizable to your exact needs and scalable to your exact size - helping improve your operations, grow your business,
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internal or external floor-planning, retail, rentals, consumer loans, origination, or seasoned paper, Deal Pack is the dependable software for mission critical operations.
Deal Pack handles all of your business needs transparently – providing you measurable improvements and complete financial control, saving you time,
increasing your bottom line, and allowing you the freedom to focus on your daily operations. Deal Pack is relied upon by thousands of customers across
all 50 states in the United States and six countries around the world. Customers properly using Deal Pack have never lost an IRS audit.
To learn more about ABCoA, visit www.abcoa.com.